Missouri cannabis cultivators file class action exposing illegal Good Day Farm cartel

CPC of Missouri-Smithville LLC (d/b/a VIBE Cannabis) and GF Saint Mary LLC (d/b/a Local Cannabis), Missouri-licensed cannabis cultivators and manufacturers, filed a class action lawsuit in the Circuit Court of Jackson County on behalf of independent wholesalers alleging they have been harmed by a deliberate, coordinated, and unconstitutional scheme by Good Day Farm (GDF) and the network of companies and investors with which it conspired. The complaint alleges the “GDF Cartel” owns, controls, or manages an illegally high share of the state’s dispensary licenses and uses this market power to manipulate Missouri’s $1.52 billion cannabis market for its own gain.

GDF and its co-conspirators built the Cartel by arranging for third parties to invest in limited liability companies (LLCs) that then acquire additional dispensary, cultivation, and processing facilities, all of which are owned, managed, or controlled by GDF. The result: the Cartel currently exercises effective control over at least 61 dispensaries—nearly triple the 22 permitted under the Missouri Constitution’s requirement that no more than 10% of dispensary licenses be under “substantially common control, ownership or management.” With 224 dispensaries currently licensed statewide, the GDF Cartel controls more than one in four dispensary licenses in Missouri. But its impact is even greater as the Cartel’s dispensaries account for upwards of 40% of wholesale cannabis purchased in the state, giving it enormous—and illegal—leverage over every independent cultivator and manufacturer forced to sell through its network.

To circumvent the 10% licensing cap in the Missouri Constitution and evade regulatory oversight, the Cartel operates under five different brand names:

• Good Day Farm (21 dispensaries),
• CODES (20 dispensaries),
• Greenlight (10 dispensaries),
• Fresh Karma (6 dispensaries), and
• 3Fifteen Primo (4 dispensaries).

But they are all part of a single coordinated operation that consistently colludes to:

• Purchase cannabis products from non-Cartel wholesalers at artificially depressed prices;
• Stock their 61 dispensaries with substantially the same products—primarily those produced by the Cartel’s cultivators—to the substantial exclusion of products from independent wholesalers;
• Compel independent wholesalers who also operate dispensaries to purchase the Cartel’s finished products as a condition of getting their own wholesale products onto the Cartel’s dispensary shelves; and
• Boycott non-Cartel wholesalers that refuse to agree to the Cartel’s anticompetitive demands.

Bob Hoffman, one of the lawyers leading the litigation, said: “The GDF Cartel is suppressing competition in the wholesale cannabis market and enriching itself with illegal profits through an unconstitutional and clandestine business conspiracy. Missouri’s cultivators and manufacturers have been suffering under this scheme for too long—many of them know something is wrong but don’t realize the scope of the Cartel’s market manipulation. We filed this suit to restore the fair, competitive marketplace that Missourians voted for when they approved recreational cannabis in 2022. Missouri-licensed cannabis companies who have experienced these practices should join us, as they may be entitled to significant damages.”

The complaint lays bare the financial toll the Cartel has inflicted: since the Cartel began its illicit price fixing, it has used its collective market power to depress wholesale prices by more than 20%, and it continues to squeeze wholesalers and threaten the viability of their operations.

    

The antitrust complaint reveals that GDF knew that its cartel-building scheme could pose legal risks to the company under the Constitution’s 10% licensing cap. The complaint quotes from a document GDF provided to potential investors that states: “Assurances cannot be made that the Missouri Department of Cannabis Regulation will not take issue with the number of marijuana dispensaries operated or supervised by the Manager or its affiliates…”

This action is brought on behalf of a putative class that includes all independent Missouri-licensed wholesalers who are not members of the GDF Cartel for purposes of injunctive relief. Wholesalers who believe they have been financially harmed by the Cartel’s practices should join the case as they may be entitled to significant damages. The putative class is represented by the law firms of Feuerstein Kulick LLP and Bryan Cave Leighton Paisner LLP.

For more information, visit www.MOCannabisClass.org

Local Cannabis Company is a wholly owned subsidiary of Calyx Peak, Inc., a premier multi-state cannabis operator (“MSO”) with licensed cultivation, extraction, distribution, and retail dispensary operations across California, Missouri, and Massachusetts. A 10-time Emerald Cup awardee and four-time back-to-back Cannabis Cult Missouri Flower champion, Local Cannabis Co. is the winningest flower company in Missouri.

VIBE Cannabis (“VIBE”) is a one of the few Missouri owned and operated licensed cannabis companies in the state of Missouri.  Since 2022, VIBE has cultivated and manufactured premium quality cannabis products, including flower, pre-rolls, vaporizers, edibles, and concentrates.  VIBE has been consistently one of Missouri’s most popular brands, winning multiple past awards Best Brand, Brand of the Year, Best Manufacturer, while also being named a finalist for Best Cultivator and Company of the Year.